AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (9) TMI 1233
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment year in question was 2014-2015. The Income Tax Officer, by order dated 25.2.2009, had found that the assessee firm had not deducted tax as required under Section 194A of the Act on Rs. 9,50,05,000/-, which was interest paid to its sister concerns. The tax to be deducted was Rs. 95,00,500/-. The Joint Commissioner of Income Tax (TDS) imposed penalty of Rs. 95,00,500/- under Section 271C of the Act by Annexure A order dated 30.7.2009 and raised a demand. The assessee had stated before the authority that non deduction of tax was not deliberate and there was a bona fide omission on its part in not deducting tax. It was further contended that since the recipient sister concerns had already included the interest amount in their returns and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e decision of the Apex Court in Hindustan Steel Ltd. v. State of Orissa [83 ITR 26(SC)] and the decision in respect of the sister concern in ITO V. Muthoot Financiers [(2006) 286 ITR (AT) 71 (Cochin)] and of this Court in ITA.17 of 2008, ITAT set aside the orders imposing penalty and the appellate order confirming the same. 3. The Revenue is in appeal raising the following substantial questions of law: "1. Whether, on the facts and in the circumstances of the case and penalty being a civil liability (306 ITR 277) the Tribunal is right in law in deleting the penalty for the inconsistent and militating reasons stated in the order? 2. Whether, on the facts and in the circumstances of the case is not the submission before or the ITAT (Annex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ommonsense and logic? (c) Are not the findings and excuses favouring reasonableness and acceptance of the same by the ITAT flimsy, against commonsense and unbecoming? 4. Whether, on the facts and in the circumstances of the case are not the reasonings in support of the so-called reasonable cause flimsy, untenable, against facts and militating against one another, and is not the order of the ITAT relying on inconsistent, varying and militating reasons faulty, unsound, illegal and perverse? 5. Whether on the facts and in the circumstances of the case the ITAT is right in law and fact in interfering with the order of penalty levied under Sec.271C of the Income Tax Act?" 4. Heard Sri.P.K.R.Menon, learned Senior Counsel for Income Tax De....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity for penalty would be the inescapable consequence, it is contended. The learned Senior Counsel places reliance on the judgments of this Court in ITA 51 of 2013 and ITA.Nos.139 and 177 of 2013 and the decisions of the Apex Court in Chairman, SEBI v. Shriram Mutual Fund and another [(2006) 5 SCC 361] and Union of India v. Dharamendra Textiles Processors and others [(2008) 13 SCC 369] in support of his contention. It is contended that the decision of the Apex Court in Hindustan Steel's case (supra), where it was held that an order imposing penalty being a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le cause for the refusal to deduct the tax at source in respect of the interest paid to the sister concern. It is therefore contended that the order of the ITAT was totally misconceived and is liable to be set aside. 6. The learned Senior Counsel appearing for the respondent/assessee contended that after the decision of this Court in ITA.No. 57 of 2007, the Apex Court in Commissioner of Income Tax v. Bank of Nova Scotia [(2016) 380 ITR 550 (SC)] had occasion to consider the very same question with regard to the deletion of penalty under Section 271(1)(c) of the Act. In the said case, the ITAT had allowed the assessee's appeal and cancelled the penalty levied under Section 271C on the specific finding that it is necessary to establish t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nalty for breach of civil obligations. Considering the nature of penalty under the scheme of the Act, it was held that the penalty leviable in cases of default or failure of statutory obligation or in other words for breach of civil obligation is not a criminal offence and there is no question of proof of intention or mens rea by the assessee for imposing penalty. 8. In the decision cited by the learned Senior Counsel appearing for the Assessee it is apparent that no specific question of law had been raised as to the nature of the penalty which is imposed under Section 271C of the Act. It is clear that no substantial questions of law had been raised in that appeal and therefore, there was no occasion for the Apex Court to consider such que....